A nine-year low and a national volume drop of nearly 5 per cent - that's the toll just the first six lockdown days took on the $55 billion-a-year residential real estate market in New Zealand.
The first national house sale data from the Real Estate Institute capturing the initial lockdown showed a 4.8 per cent sales volume drop. Nationally, 6866 residential properties were sold in March, 347 fewer properties than a year ago and the lowest in March in nine years, REINZ has just announced.
New Zealanders went into lockdown at 11.59pm on Wednesday, March 25 so only the first few days of the national property trading freeze was captured in the data.
In mid-May, REINZ will say what happened to the market this month when most of the lockdown will be captured.
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Unlike healthcare workers or emergency services, the real estate sector is not classified as essential and the institute has estimated daily sales of around $125m/day are being lost, equating to a possible loss of trade around $3.6b during the lockdown.
Bindi Norwell, REINZ chief executive, said today that during the first quarter of the year, 2000 fewer new listings come to the market than the same time last year.
"So when you take that into account, plus the impact of six days of lockdown because of Covid-19 then it's understandable why the number of properties sold in March has fallen nearly 5 per cent," she said.
That was backed up by REINZ's seasonally adjusted sales volumes figures, which showed that based on what happened in February "we would have expected a much better result in March and this is likely the impact of the lockdown week on sales volumes", Norwell said.
About $55b of national residential property sales were made last year, up 2 per cent on 2018.
Norwell said today that before the pandemic, the property market was in a strong period of growth and Auckland had five consecutive months of year-on-year house price growth, following two flat years.
"How big the effects of Covid-19 are is up for debate, but the impact will depend on a huge number of factors including how long the country is in an alert level 4 lockdown for, the level of unemployment, consumer and business confidence levels, people's ability to access finance and finance their own mortgages and how long the wider economy takes to recover."
Pre-lockdown, the market was strong: in February national median house prices surge 14 per cent to hit $640,000, up from $560,000 last February. That was the largest percentage increase in 53 months and even Auckland, sluggish for three years, was rocketing away again.
Auckland eclipsed its previous record median price set three years ago when it was $900,000. In February, Auckland sales had a $65,000 uplift and in March, hit the $950,000 mark, meaning that house prices rose $2097 a day in March, new REINZ data showed.
Most of March was strong for prices, up nationally 13.7 per cent and setting a new record of $665,000, up from $585,000 in March last year.
Eight regions set new record median prices.
Norwell said March was extremely buoyant. Every region had an annual increase in median prices. Last month also marked a new record median price and 12 out of 16 regions had double-digit annual median price increases.
Owen Vaughan, editor of NZME-owned property listings site OneRoof.co.nz, said: "Given the escalation in government Covid-19 measures in the lead-up to the eventual lockdown, starting with the closure of borders on March 15, it's not surprising there was a drop in market activity. Buyers and sellers who were well advanced in their property journeys will have stayed the course, but news of the spread of the coronavirus will have given new participants reason to withdraw.
"Housing markets figures for the lockdown will likely show bigger drops in activity but, like the figures released today, should be used with caution. The numbers that will matter most will be those that measure the market once the country comes out of lockdown. These will show the true effect of Covid-19 on buyer and seller sentiment, and until then, Kiwis should avoid making hasty property decisions."
Jeremy Couchman, Kiwibank senior economist, said the REINZ data hinted at the impact on the market following the lockdown.
"The housing market was building solid momentum in the opening months of 2020, which most likely flowed into the start of March. But sales activity looks to have hit the brakes at the end of the month when the lockdown was enforced," Couchman said.
Kiwibank's economics team is forecasting an annual 9 per cent house price fall.
"Job losses and business closures will mount. Vendors needing to sell in this environment will take lower prices, as previously motivated buyers are forced to sit this one out. A 9 per cent annual house price fall would be similar the low seen during the GFC," Couchman said in an analysis of today's data, just released.